GM reports $30.9B loss

Friday

Feb 27, 2009 at 2:00 AM

WASHINGTON — General Motors yesterday posted a loss of $30.9 billion in 2008 as the auto giant suffered one of its worst years in decades and as company leaders prepared to meet with officials to appeal for more federal money to survive.

THE WASHINGTON POST

WASHINGTON — General Motors yesterday posted a loss of $30.9 billion in 2008 as the auto giant suffered one of its worst years in decades and as company leaders prepared to meet with U.S. government officials to detail the need for more federal money to survive.

Frozen credit and falling consumer confidence kept people from buying cars, and the largest U.S. automaker reported a $9.6 billion quarterly loss in the last three months of the year. The company burned through nearly $6 billion in cash during that time, and quarterly revenue fell to $30.8 billion from $46.8 billion.

GM also said it anticipates receiving a "going concern" opinion from its auditors, meaning they will determine whether there is substantial doubt that GM will be able to financially continue operations.

As GM waits for the government to assess its request for additional aid, "we thought it was prudent to provide this disclosure," said chief financial officer Ray Young. "There's no doubt the economic situation is having a dramatic impact on General Motors."

In a controversial effort led by the Bush administration to help U.S. automakers suffering from the recession's impact, GM received $13.4 billion in federal loans. Last week, the company submitted an updated viability plan to Treasury, increasing its loan request to a total of $30 billion.

Wagoner said he expects "challenging conditions will continue through 2009, and so we are accelerating our restructuring actions."

This is GM's second-worst annual performance in the company's history. Just last year, GM lost $38.7 billion but much of that loss was attributed to penalties for unused tax credits.

GM spent $19.2 billion of its cash reserves in 2008, leaving it with $14 billion as of Dec. 31, its minimum operating requirement.

The global economic slump, which has led auto sales to new lows, has pushed GM into the red. Worldwide, GM sales totaled 8.35 million vehicles, down 11 percent from the year before, with more than half coming from outside the United States.

To adapt to the changing market, GM reduced its structural costs by $3 billion in 2008.

Last week, as submitted in its viability plan, GM announced it would cut 47,000 jobs in 2009 and close five U.S. plants by 2012. It plans to either sell or close Saab, Hummer and Saturn.

The company is now offering 22,000 retirement-eligible hourly workers $20,000 and a $25,000 voucher for a new car if they leave by April 1.

GM is still negotiating concessions from its bondholders and the United Auto Workers.

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